The Market Value of Fords' Equity,preferred Stock and Debt Are

question 9

Multiple Choice

The market value of Fords' equity,preferred stock and debt are $7 billion,$3 billion,and $10 billion,respectively.Ford has a beta of 1.8,the market risk premium is 7%,and the risk-free rate of interest is 4%.Ford's preferred stock pays a dividend of $3.5 each year and trades at a price of $27 per share.Ford's debt trades with a yield to maturity of 9.5%.What is Ford's weighted average cost of capital if its tax rate is 30%?

• A)10.12%
• B)10.34%
• C)11.08%
• D)11.47%

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Definitions:

General Environment

Is the set of cultural, economic, legal–political, and educational conditions found in the areas in which the organization operates.

Specific Environment

The set of owners, suppliers, distributors, government agencies, and competitors with which an organization must interact to grow and survive.

Adhocracy

An organizational structure that is flexible, adaptable, and non-hierarchical, often used to spark innovation and tackle emerging issues.

Decentralization

The distribution of decision-making powers from a central authority to local or individual levels within an organization or system.